Consumers Community Co-operative—Atlantic Canada’s largest—focuses on the cooperative nature of the business
Almost four years ago, 28 financially troubled co-operatives in Atlantic Canada knew that struggling one by one they could not survive. Pitted against two fiercely competing multinational corporations, they had between them 28 lawyers, 28 boards of directors, 28 cleaning contracts, 28 sets of accounts, and growing accounts payable to their wholesaler Co-op Atlantic.
They also had 28 sets of outdated frontends, 28 sets of worn-out freezers and coolers, a few leaking roofs, and 28 corporate cultures. Worse, for the most part, they had not prepared their members for the news that many had negative member equity and that their cheap groceries had, in effect, been paid for out of share capital.
They also had tens of thousands of loyal consumer members and many communities that depended upon them to ensure people had a continued choice of a co-operative source of goods and services. In many communities the co-op was seen as playing a leadership role in fair prices and consumer-friendly practice. The sales of the co-operatives combined exceeded $100 million Canadian. In addition they had several thousand workers who depended upon the co-op for a livelihood. Finally, their sales and purchasing power gave significant added strength to almost a hundred other co-operatives and their second tier wholesaler, Co-op Atlantic. Was there a way to revitalize these businesses, protect their assets and ensure that future generations of families in these communities had a co-operative option?
Pushed by financial institutions and supported by their own wholesaler, the 28 co-operatives took a gutsy decision to merge. Together they became Consumers Community Co-operative—CCC. Of course, the merger decision did not instantly end their problems. They achieved considerable economies of scale, eliminated many of the poor business practices that had grown up over the years, began the process of creating a common co-operative culture and practice, and set about cutting their losses.
In the ensuing four years they have made some hard decisions and closed some stores. Significant progress was made in lowering operational losses, but that progress temporarily disappeared as overvalued properties were disposed of and the bookkeeping entries for goodwill were written down. Nevertheless, progress was steady. New frontends appeared, many other improvements were made, and a few stores began to make a surplus. The turnaround plan had been implemented and the losses were down—but there were still losses.
The board was pleased with the progress but, making a tough assessment, concluded that it was time to revisit the turnaround plan. Management was asked to prepare an updated plan that would contain a number of elements: review the market positioning; make membership more meaningful; review plans locality by locality; build the co-operative difference; and examine staff turnover and how the positive regard of members for staff might be reflected in the business.
New strategic direction
The resulting strategic plan adopted by the board in fall 2004 is a strong affirmation of the board’s faith in the co-operative nature of the business. It seemed clear that a major set of initiatives would be needed if the new co-operative were to emerge from hunkering down for survival and begin building the business in a way that clearly set it apart from its competitors. After all, if a co-operative (or credit union for that matter) operates no differently from its competition, there is no need for it in the marketplace. If a credit union operates exactly like a bank, who needs it? The board of the CCC believes that their best assurance for the future is a market positioning based on the co-operative difference—a position where the competition has no interest and limited capacity to follow.
Creating the future
The new strategic plan has a strong focus on the co-operative nature of the evolving Consumers Community Co-operative. The plan provides for the co-operative to “expand upon both our co-operative philosophy and business practices to achieve our goals and objectives.” The mission stated in the plan states, “We will build successful co-operative banners [i.e., store formats] for the long-term provision of goods and services that will act as a catalyst to improve the economic and social environment of our members, staff and communities we serve.” The plan includes a statement of both the 10 co-operative values and the seven co-operative principles.
While the plan goes into great detail, there are a number of specific initiatives that represent significant moves beyond the innovations and improvements that have driven the turnaround to date. These initiatives flow from several major themes contained in the plan.
Improved member benefits: Improved member value program; increased awareness of reciprocal shopping benefit; enhanced member pricing in flyers; strengthening local co-operative councils and member associations; increased opportunities for members to exercise input and control through co-operative democracy. The intent of these initiatives is to reinforce, for members, the personal benefits they perceive from having a co-operative store in their community whose purpose is to meet their needs and direct the benefits to them. This involves a balance of both financial benefits and increasing the say they have in how their store operates. They want a store they own where they can count on being treated fairly in terms of both price and quality.
Building a co-operative difference: Support of Fair Trade initiatives; expansion and promotion of the agri-food strategy; become a leader in information on responsible and healthy food choices, including organic food choices; expanded community benefits program, including strong support for food banks and the Huntington’s Society. People find co-operative values and principles attractive. They want a better world characterized by increased fairness. The CCC is making a commitment to members and the community to operate in ways that ensure farmers are treated fairly, whether they are local (agri-food strategy) or produce our food halfway around the world (Fair Trade). Members and the public want their store to meet community needs and to make it more possible for them to choose healthy food for their families. More and more members and potential members want to be able to make food choices that have a minimal negative impact on the ecology, and the CCC will respond to that desire.
Improved quality of goods and services: Improved hours of operation; higher quality of fresh food offerings, including a double-your-money-back guarantee on fresh product; improved pricing strategy; bakery freeze and thaw program to provide fresh-baked product in store; improved general merchandise offerings; joint-venture projects with Medicine Shoppes and Co-op Country stores. Members and customers depend on the co-operative to provide the products their families need with a combination of variety, quality, and fair prices.
Increased efficiency in operations: Central meat cutting; waste reduction; inventory control; equipment replacement; improved use of retail space; renegotiation of long-term debt; balanced scorecard measurement of results. People want to have confidence that their co-operative business is efficient and uses its resources to achieve not just financial goals but all of the co-operative business bottom lines.
Greater worker involvement: Lower staff turnover; strengthened training programs for workers; exploring greater inclusion of the workers as members and owners; strengthened management development program. The new plan recognizes the enormous stake our workers have in the success of the co-operative business. Their jobs and the quality of their salaries and benefits depend on the financial success of the co-op. Workers as well want to be engaged in a business in their community in which they can take pride. They want the work they do to benefit their community and contribute to the wellbeing of individuals and society. In turn, the success of the co-operative depends upon them and will not be achieved without their efforts.
In sum, this is an ambitious set of initiatives to which the board and management of the CCC are dedicated. There is a growing belief that co-operative business has the power to create a virtuous circle in which values and principles shape the business and attract support, deepening member loyalty and attracting increasing numbers of people. This increased support and loyalty drive financial success, and the increasingly successful co-operative business is able to deepen further its positive social and economic value to our society.
The merger has been a long road to co-operative renewal. This plan will unfold over the next three years. The “vehicle” has been repaired and refurbished to travel down that road. Now fresh power is being harnessed to drive the process more firmly toward clear co-operative goals.
For background articles, see “Canada’s Co-op Atlantic” in CG #108, Sept-Oct. 2003 and “When the Weather Gets Rough, Co-ops Are Tough,” in CG #110, Jan.-Feb. 2004, both by Tom Webb; and “Food: From Start to Finish” in CG #112, May-June 2004, by Jane Livingston.
Typographic note: This article retains the Canadian spelling convention of hyphenating “co-operative.”
*** Tom Webb is program manager for the St. Mary's University Master of Management--Co-operatives and Credit Unions ([email protected]).